A leveraged buyout (LBO) is a financial acquisition where a company is purchased primarily using a s

A leveraged buyout (LBO) is a financial acquisition where a company is purchased primarily using significant borrowed funds, collateralized by the target's assets and repaid by its cash flows, with the goal of maximizing investor returns through high leverage. Value is created via deleveraging, operational growth, and multiple expansion, with ideal candidates having stable cash flow and low existing debt, though LBOs carry high financial risk and typically exit through sale, IPO, or secondary buyout within 3-7 years.